Grattan / Just how rubbery is Tony Abbott’s carbon saving pledge?

EVEN before the Senate has finally voted to repeal the carbon tax, the debate has moved to a new stage in which the government’s claims will be tested against what Julia Gillard would have called the “lived experience”.

Will the average household really get to be $550 better off over the coming year, as Tony Abbott insists? And how will we know?

The government behaves as if time divides into pre-repeal and post-repeal. But if it sees the end of the carbon tax as some sort of political circuit breaker, it is surely living in la-la land, especially given the doubt over the believability of the $550.

The figure, which Abbott uses on every possible occasion, is based on Treasury modelling.
About half the amount is from taking the tax off power prices – it is easy to measure the impact that will have.

The rest is from the flow through to items such as food, clothing, housing, household appliances, and holiday travel.

This poses two problems. Measuring the impact on these items would be difficult in practice given all the other variables affecting price. In addition, some large companies in the airline and supermarket sectors have said they absorbed the carbon price without passing it onto consumers, so they don’t intend to pass on its demise. For example, a Woolworths spokesman has been quoted as saying: “Just as prices didn’t increase when the tax was introduced we don’t expect any substantial change should it be repealed.”

The impact on households of removing the tax is to be monitored by the Australian Competition and Consumer Commission. A spokesman for Treasurer Joe Hockey said on Monday: “Companies through substantiation notices to the ACCC [will] say what savings have been made and passed on to consumers.”

Clive Palmer’s amendment – requiring power companies to pass on savings on pain of fines – was refined over the weekend to ensure that it did not apply to businesses willy nilly. The concern from business at the initial version was that it might have a wide spread, even though that was not Palmer’s intention. This just underlines the difficulty of measuring savings in the non-power sector. Businesses did not want to be under an obligation to give price relief.

If Labor can throw doubt over whether families will get all the promised relief, it rains on what will be the government’s very noisy celebration of the end of the tax. It also lays the groundwork for later questioning of how much families have actually received of that $550.

In parliament on Monday, the ALP threw up Abbott statements, made in opposition, about the impact of the carbon tax. When he was asked about his 2011 claim that the carbon price would be a $10 a week hit on the average person at the supermarket checkout, Abbott kept his answers general. The prospect of having to match delivery with the expectations created must be dawning.

Palmer, having put himself in the spotlight by driving an amendment and kept the government on tenterhooks, finally did what he was always going to do – reconfirming that PUP would vote down the tax in the Senate, which is due to consider the legislation (again) on Tuesday.

With the carbon scheme near its termination opposition leader Bill Shorten, delivering a strong speech in the House, was blunt, including about his own side.

Abbott had “wrested away the leadership of the Liberal party from the person [Malcolm Turnbull] who believed most in the evidence, and the need for a response”, he said.

“For our part, we [the Rudd government] walked away from calling an election which the nation was entitled to have.

“We did the second best. We worked to achieve a national response. We settled for second best, transforming international pricing into a carbon tax.

“But we were right to have international pricing. We were right to support an emissions trading scheme. We were right to have climate change as a political priority of the previous government.”

Shorten canvassed Labor policy and, without dealing with the 2016 election, again strongly talked up the benefits of an ETS.

“An ETS guarantees the lowest cost for Australian businesses and for Australian families. An ETS delivers business certainty and it positions Australia to maximise economic benefit from the growing global trend of pricing pollution.

“And it puts Australia on the crest of the wave of the unprecedented new market opportunities in clean energy and green technology.”

While it’s a long time until the election, Shorten has hitched his credibility to emissions trading. If he retreats on that as the poll draws closer, he will be exposed as hypocritical. Yet taking that policy to the election would be to put some heavy weighting in his saddle.

Michelle Grattan does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.